Government of Haryana

WHITE PAPER ON

STATE FINANCES (Part II)

FINANCE DEPARTMENT MARCH, 2015

(ii)

(iii)

CONTENTS

Page No.

Preface (v)

Chapter 1 Financial Health of Public Sector Undertakings

1

Chapter 2 Off Budget Resources and Urban Local Bodies in the State

20

Annexure I List of Public Enterprises of Haryana Government

31

II Details of Equity Infusion by State Government in Power Utilities

33

III Details of Working Capital Borrowing by DISCOMs

34

IV Details of Gross Outstanding Receivables of DISCOMs

35

(iv)

(v)

Preface

1. In the October, 2014 elections to the Haryana Legislative Assembly, the

people of Haryana gave a decisive mandate for Government. This of course came

with high expectations of better governance and faster development. After joining

office, the Chief Minister had promised to bring out a White Paper on the state

finances so as to benchmark the status of the State finances. Part I of the White

Paper was presented earlier this week and provided a factual status of the various

aspects of finances and the related growth data for the State of Haryana over a

10 year period i.e. 2004-05 to 2013-14.

2. This Paper attempts to provide an overview of the financial health of the

Public Sector Undertakings, especially these in the sector of Power, Social Welfare

and Cooperatives. A synopsis of the committed liabilities, profits and losses

generated by these PSUs in their operations during the period under review is also

presented. An analysis of the financial health of the Cooperative Banks of the State,

the HSCARDB & the HARCO Bank has also been made. The paper also attempts to

analyse of the financial health of the Urban Local Bodies of the State and that of

several off budget resource centres like the Marketing Board, HRDF, Infrastructure

Development Fund of the Department of Town and Country Planning and the

Construction Worker Cess Fund of the Department of Labour. The method, manner

and extent of use of these funds has also been examined in an effort to provide a

complete overview of the off budget asset management of the Government.

3. Data for this part of the White Paper has been mainly drawn from the

Budget documents of the Government of Haryana, Haryana Bureau of Public

Enterprise and the Finance Accounts. In some cases, data has been collected from

the Departments and institutions concerned.

CHAPTER 1

Financial Health of Public Sector Undertakings 1.1 The Government of Haryana has over the years created several Public Sector

Enterprises in sectors that required flexibility of action outside Government

Departments to take forward the developments agenda. To facilitate faster decision

making these entities were allowed to raise their own resources and spend the same

to achieve the objectives for which they were established. Of the 43 Public Sector

Undertakings (PSUs) in Haryana, 19 have been created under the Companies Act,

1956, 19 under the Cooperative Societies Act, 1984 and the remaining five under

special Statutes enacted either by an Act of the Parliament or of the State

Legislature. The list of the State PSUs is placed at Annexure I. The financial health of

the major PSUs created under the Companies Act and the Cooperative Societies Act

have been covered in this chapter, while the financial health of some PSUs and

institutions created under special Statutes are covered in the next chapter on major

off-budget resources management in the State.

Public Sector Undertakings in the Power Sector

1.2 The Power Sector in Haryana comprises four Companies, namely Haryana

Power Generation Corporation Ltd. (HPGCL), Haryana Vidyut Prasaran Nigam Ltd.

(HVPNL), Uttar Haryana Bijli Vitran Nigam Ltd. (UHBVNL) and Dakshin Haryana Bijli

Vitran Nigam Ltd. (DHBVNL) created in 1998 as part of power sector reforms. As per

the reform process, the tariff to be charged by these companies is determined by an

independent regulator i.e. the Haryana Electricity Regulatory Commission (HERC).

The Commission functions in accordance with the Indian Electricity Act, 2003 and

regulations issued from time to time. The HERC determines the Annual Revenue

Requirements (ARR) and consequently the tariff of these companies on a ‘cost plus’

basis, and on the basis of normative efficiency of operational parameters. The

financial health of these companies is detailed below.

1.3 Haryana Power Generation Corporation Ltd. (HPGCL): In the period under

reference the turnover of HPGCL increased from Rs. 1,638 crore in 2004-05 to

2

Rs. 5,932 crore in 2013-14.The Company had a cumulative loss of Rs.87 crore

in 2004-05. This loss increased 500 percent to Rs. 438 crore in 2013-14. Since

2004-05, the company has remained in profit for 4 years and in losses for 6 years.

The company had a total debt of Rs. 2,467 crore as on 31.03.2004, which has

increased over 200 percent to Rs. 5,748 crore as on 31.03.2014. A bulk of this debt

has been used for the creation of additional generation capacity mainly at Yamuna

Nagar and Khedar (Hisar) Thermal Power Plants. The Government has provided

Rs. 2,317 crore as equity during the period under reference to enable the company

to raise long-term loans for creation of capital assets. Besides providing equity the

State Government also provides guarantees for the long-term loans raised by the

power companies, thus creating a future contingent liability for the Government.

1.4 Haryana Vidyut Parsaran Nigam Ltd. (HVPNL) The turnover of the

company increased from Rs. 346 crore in 2004-05 to Rs.1,057 crore in 2013-14.

Since 2004-05, the Company has remained in profit in 6 years and in losses in

4 years. In 2004-05, it had a cumulative loss of Rs. 88 crore and as on 31.03.2014 it

had a profit of Rs. 16 crore. The debt of the company was Rs. 2,493 crore as on

31.03.2004 and this has increased to Rs. 4,398 crore as on 31.03.2014. The

Government has provided Rs. 1,562 crore as equity to this company during this

period to facilitate the raising of long-term loans. The two companies together have

an accumulated debt of Rs. 10,146 crore in 2013-14, as indicated in Table 1.

Table 1

Financial Position of the HPGCL and HVPNL

(Rs. in crore)

Company Year Accumulated profit/Losses

Accumulated Debt

Turnover

HPGCL 2004-05 -86.94 2,467.00 1,637.75 2013-14 -438.45 5,748.00 5,931.88

HVPNL 2004-05 -87.79 2,492.65 345.53 2013-14 +16.08 4,397.73 1,056.51

Total 2004-05 -174.73 4,959.65 1983.28 2013-14 -422.37 10,145.73 6988.39

Source: Power Department Haryana

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1.5 Distribution Companies (UHBVNL & DHBVNL): The combined annual

turnover of these companies increased from Rs. 3,903 crore in 2004-05 to

Rs. 21,566 crore in 2013-14. Both the companies remained in losses in all 10 years

since 2004-05. The cumulative loss of both the companies together increased by

2600 percent from Rs. 1,030 crore in 2004-05 to Rs.26,912 crore in 2013-14.The

accumulated debt of both companies together increased 1900 percent from

Rs. 1,458 crore as on 31.03.2004 to Rs. 28,199 crore as on 31.03.2014. Out of this

Rs. 3,487 crore of debt has been used for creation of assets and the remaining

Rs. 24,712 crore has been used for operational financing and deficit financing on

account of losses. The High Aggregate, Technical & Commercial (AT&C) losses that

were 38 percent in 2005-06 came down to 25.54 percent in 2011-12 but again

increased to 29.42 percent in 2013-14. Due to cash deficits on account of these

losses, the DISCOMs have faced severe liquidity stress. To relieve the DISCOMs of

this stress, a Financial Restructuring Plan (FRP) for the Power Sector was proposed

by the Government of India and accepted by the State Government. Under this plan,

debt on account of short-term liabilities amounting to Rs.7,366 crore has been

committed to be taken over by the State Government against which bonds have

been issued by the DISCOMs on behalf of the State Government. The Government

has also committed to pay the interest on these 10-year bonds, which is about

Rs.721 crore annually. The Banks have restructured the balance amount of the loan

of Rs. 7,396 crore. This package has provided temporary relief to the DISCOMs. But

the sector shows a clear trend of inefficiency of management, a poor financial state

and as a result a drain on the State’s resources though they are given a ‘cost plus’

operational framework. As it evident from Table 2, the DISCOMs have an

accumulated loss of Rs. 26,912 crore and an accumulated debt of Rs. 28,199 crore

in 2013-14 that is unsustainable.

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Table 2

Financial position of the DISCOMs in Haryana

(Rs. in crore)

Company Year Accumulated Losses

Accumulated Debt

Turnover

UHBVNL 2004-05 472.00 950.75 1,615.00

2013-14 16,185.00 17,912.56 10,112.00

DHBVNL 2004-05 557.91 507.61 2,288.07

2013-14 10,726.59 10,286.68 11,454.06

Total 2004-05 1,029.91 1,458.36 3,903.07

2013-14 26,911.59 28,199.24 21,566.06

Source: Power Department Haryana

1.6 The HERC sets the short–term working capital loan limits for these companies

each year while fixing the Annual Revenue Requirements (ARR). In 2008-09 the

HERC had permitted the DISCOMs to raise Rs. 453 crore as working capital loans.

These companies however exceeded this limit and raised Rs. 5,181 crore of loans,

thus taking Rs. 4,728 crore of short-term loans in excess of the permitted amount.

This resulted in interest costs to these companies much in excess of permitted

levels, which also consequently adversely impacted their finances. In 2013-14 the

total working loan portfolio was Rs. 21,121 crore in excess of the permitted ceiling.

This is 400 percent increase in the working capital loans raised during the period

under reference; which have resulted in a huge additional interest cost that is not

included in the Aggregate Revenue Requirement (ARR) approved by the HERC and

this cost is thus borne by the DISCOMs as a loss. The details are provided at

Annexure III.

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Table 3

Details of Rural Electrification (RE) Subsidy released by State Government to Power Companies

(Rs. in crore)

Year Subsidy Released Percentage growth

2004-05 1102.00 19.28

2005-06 1302.39 18.18

2006-07 1544.37 18.58

2007-08 2371.42 53.55

2008-09 2636.90 11.19

2009-10 2771.07 5.09

2010-11 2964.20 6.97

2011-12 3576.92 20.67

2012-13 5129.13 43.40

2013-14 5200.00 1.38

2014-15 (Likely) 5330.00 2.50

Total 34225.40

Source: Power Department, Haryana Note: Data for 2013-14 is pre-actual.

1.7 The State has infused Rs. 1,767 crore as equity into the DISCOMs between

2004-2014. Thus, for the period under reference the Government has provided a

total of Rs. 5,646 crore to the four power companies as equity (Annexure II). Besides

paying Rs. 532 crore under the Electricity Arrear Waiver Scheme 2005-07, the

Government paid Rs. 722 crore as interest on the Bonds issued by DISCOMs under

the Financial Restructuring Plan (FRP). As detailed earlier, under the FRP the

Government is also committed to take over the liability of Rs. 7,366 crore bonds that

6

have been issued by the DISCOMs on behalf of the State Government. The

Government has also provided Rs. 28,598 crore as the Rural Electrification (RE)

subsidy to the power companies during this period and Rs. 5330 crore is likely to be

provided during 2014-15, details are in Table 3. As is evident from the data, the

financial health of these companies has deteriorated over the years and they have

become a huge drain on the Government’s budgetary resources.

Financial Health of PSUs in the Industrial Sector

1.8 There were four corporations in the industrial sector namely the Haryana

State Industrial & Infrastructure Development Corporation (HSIIDC), the Haryana

Financial Corporation (HFC), Haryana Minerals Ltd. (HML) and Haryana CONCAST

Ltd. (HCL). Of these, two corporations namely HCL and HML were closed down

during the year 2001-02 and 2003-04 respectively. Although the operation of these

PSUs stands closed, these have not been wound up till date. Thus, they are required

to maintain their accounts annually and to carry out other mandatory requirements in

accordance with the provisions of the Companies Act. The other two Corporations

are the Haryana State Industrial & Infrastructure Development Corporation (HSIIDC)

and Haryana Financial Corporation (HFC). The HFC has stopped giving loans since

2010. HSIIDC is in operation with a view to encourage and expedite the growth and

employment in the secondary sector in Haryana. Their financial health is detailed

below.

1.9 Haryana State Industrial &Infrastructure Development Corporation

(HSIIDC) was established in 1967 with the objective of developing industrial

infrastructure in the State. The mandate of the company has been extended to

pursue certain other initiatives like the Delhi Mumbai Industrial Corridor (DMIC)

Project. Apart from industrial and infrastructure development, HSIIDC is also

engaged in providing financial assistance to entrepreneurs. During the period under

reference, the company has been in profit. Its cumulative profit was Rs. 4 crore in

2004-05, which increased to Rs. 354 crore in 2012-13. The profit has jumped to

Rs. 989 crore in 2013-14 on account of a change in the accounting procedure from

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cash to an accrual system of accounting. The turnover of the corporation increased

from Rs. 35 crore in 2004-05 to Rs.145 crore in 2012-13; but it become Rs. 5,341

crore in 2013-14 on account of the change in the accounting procedure. The debt of

the HSIIDC was Rs. 179 crore as on 31.03.2005, this increased to Rs.4,343 crore as

on 31.03.2014. Most of this debt has been utilized towards acquisition of land and

payment of enhanced compensation to landowners. The non-performing assets

(NPAs) of HSIIDC have been extremely high at 40.07 percent in 2004-05 and these

have come down to 21.36 percent in 2013-14. Despite the decline, such a high NPA

level is a matter of grave concern for the corporation. As on 31.03.2014, the

corporation had receivables due from the allottees to the extent of Rs. 565 crore.

Though HSIIDC has a large land bank of over 10,000 acres valued at Rs. 11,332

crore as on 31.3.2014, a financial analysis indicates that HSIIDC has come under

heavy debt besides having acquiring a pronounced cash flow problem during the

period under reference. These are challenges that the HSIIDC needs to address

swiftly.

1.10 Haryana Financial Corporation (HFC) was established in 1967 under a

Central Act known as the State Financial Corporation Act 1951, with an objective to

provide term loans to the industries, especially first generation entrepreneurs. Since

1967 up to March 31, 2013 the Corporation has sanctioned loans of Rs.2,881 crore

to 18,531 units and actually disbursed Rs. 1,793 crore to 17,160 units. However, the

HFC has discontinued the sanction of loans with effect from May 2010. The turnover

of the Company has been decreasing continuously. From a turnover of Rs. 51.25

crore in 2004-05 it has reduced to Rs.13.46 crore in 2013-14 due to reduced

financing. Since 2004-05 the company remained in profit for 6 years and in losses for

4 years. Its cumulative loss was Rs. 166 crore in 2004-05, which stands at Rs.161

crore in 2013-14. Its debt was Rs. 313 crore as on 31.03.2005, which has been

reduced to Rs. 62 crore as on 31.03.2014. The Board of Directors of the Corporation

has decided to wind-up the operations of the Corporation, as it is no longer able to

fulfill its mandate to finance industrial units.

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1.11 The Small Industries Development Bank of India (SIDBI) has categorized loan

assets into two parts i.e. standard assets and non-performing assets (NPAs).

Standard assets are such assets that are good in repayment and the organization

earns regular interest on such loans. NPAs include defaulters and their category is

decided on the basis of the age of the default. The gross percentage of HFC’s NPAs

has been increased from 76.76 percent in the 2004-05 to 82.59 percent in 2013-14.

In order to settle these NPA accounts, the corporation introduced two loan settlement

schemes in the years 2005 & 2011. On the basis of these HFC has approved

settlement of 1198 loan accounts under NPA and recovered an amount of

Rs. 122.62 crore for the period 01.07.2005 to 31.03.2014.

Table 4

Financial position of the Industrial Sector PSUs

(Rs. in crore)

PSUs Year Accumu-lated Profit/

Losses

Accumu-lated Debt

Turn-over Equity Contribu-ted by the State Govt.

NPAs % to total

outstanding

Haryana State Industrial Development Corporation (HSIIDC)

2004-05 +3.77 178.95 35.57 47.12 40.07

2013-14

+988.89

4,343.06

5,341.03

48.82

21.36

Haryana Financial Corporation (HFC)

2004-05 -166.11 313.51 51.25 26.12 76.75

2013-14

-160.60

62.01

13.46

202.01

82.59

Total 2004-05 -162.34 492.46 86.82 73.24 2013-14 828.29 4405.07 5354.49 250.83

Source: Haryana Bureau of Public Enterprises

As Table 4 indicates, the cumulative profits of HFC and HSIIDC were Rs. 828 crore

in the year 2013-14 while the cumulative debt was Rs. 4,405 crore in the year

2013-14. The non-performing assets of these PSUs are also a cause of serious

concern.

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Financial Health of PSUs in the Agriculture Sector

1.12 We are examining four PSUs under this sub group:

a) Haryana Agro Industries Corporation

b) Haryana Seeds Development Corporation

c) Haryana Land Reclamation and Development Corporation

d) Haryana State Ware Housing Corporation.

Haryana Agro Industries Corporation was established in 1967. Its main objective

is to formulate agro-based industries, carry on activities such as the sale of seeds,

fertilizers and agricultural implements through a network of 17 farmer service

centers. In addition, it undertakes procurement activities under the Minimum Support

Price (MSP) regime. The corporation has three plants for manufacturing cattle feed,

fertilizers and chemicals; and an agro engineering workshop. In the last 10 years

from 2004-05 onwards, the company remained in profit in 7 years and in losses in

3 years. It had a cumulative profit of Rs. 21 crore in 2004-05, which increased to

Rs. 49 crore in 2011-12. However, in 2012-13, it incurred a massive loss of

Rs. 44 crore and a further loss of Rs. 4 crore in 2013-14. As a result its cumulative

profit by the end of 2013-14 reduced to Rs. 68 lakhs. The loss is stated to be due to

the non-approval of incidental costs for procurement activities by the Government of

India, from the year 2008-09 onwards. The turnover of the company increased from

Rs. 617 crore in 2004-05 to Rs. 2655 crore in 2013-14. The turnover is essentially on

account of procurement of wheat and paddy on behalf of FCI. The debt of the

company as on 31.3.2014 is stated to be Rs.1,248 crore which is also mainly on

account of the cash credit limit taken for procurement of wheat and paddy. The

corporation has remained afloat because of its procurement operations and has

stagnated in its original mandate. In 2013-14 over 94.56 percent of the corporation’s

turnover was from its procurement activities. These activities are not the core

mandate of the corporation. Thus, the corporation needs to focus attention on

achieving its core mandate.

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1.13 Haryana Seeds Development Corporation was established in 1974, with

the objective of organizing production and distribution of certified seeds to

the farmers of the State at reasonable rates. In all the years since 2004-05,

the company remained in modest profit. Its cumulative profit increased from

Rs. 3.56 crore in 2004-05 to Rs. 11 crore in 2013-14. The turnover of the company

increased from Rs. 34 crore in 2004-05 to Rs. 120 crore in 2013-14. The debt of the

company is stated to be of the tune of Rs. 75 crore in 2013-14, which is working

capital loan, obtained from the banks for the procurement of seeds. The company

has six seed processing units in various parts of the Haryana. It also has storage

capacity for storing seeds of 4.41 lakh quintals. Since the main objective of the

corporation is to distribute seeds at reasonable price to the farmers, therefore, its

performance cannot be judged in terms of profitability. However, its market share is

only about 15-20 percent of the total seed distribution in the State.

1.14 Haryana Land Reclamation and Development Corporation was created in

1974. Its mandate includes sale of agriculture inputs, production of seeds and

reclamation of degrading soil. In the past 10 years from 2004-05 onwards the

company remained in profit for 7 years and in loss for 3 years. Its cumulative profit

was Rs. 8 crore in 2004-05 and was Rs. 7 crore in 2013-14. The turnover of the

company was Rs.84 crore in 2004-05 and this witnessed a declining trend for many

years and stood at Rs. 81 crore in 2013-14. The debt of the company was

Rs. 1 crore as on 31.3.2005 and increased to Rs. 5 crore as on 31.03.2014. The

State Government guarantees the loans taken. The company is an instrumentality of

the State for the distribution of agriculture inputs like gypsum, urea, zinc sulphate,

etc. Over the years the company has diversified its activities, running three gas

agencies and petrol pumps, which is not the original mandate of the corporation.

It also has income from rental of shops. The operations of the corporation have

remained stagnant as the turnover reduced in absolute terms in last 10 years.

Taking into account the inflationary factor, it can reasonably be said that the turnover

of the company is declining drastically and that its operations have deviated from the

original mandate.

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1.15 Haryana Warehousing Corporation was created in the 1967 under the

Warehousing Corporations Act, 1962. Its principle mandate is to build go-downs and

warehouses at suitable places, to decrease wastage and losses in storage and to

promote scientific storage facilities. The corporation is running warehouses at 109

places in the State with a total storage capacity of 17.91 lakhs M.T that is about

17 percent of the total State storage capacity in 2013-14. The cumulative profit of

the corporation was Rs. 239 crore in 2004-05, which became Rs. 260 crore

in 2013-14. The turnover of the corporation has increased from Rs. 795 crore in

2004-05 to Rs. 2,631 crore in 2013-14. This turnover is on account of procurement

operations undertaken by the HWC on behalf of the State Government. Out of the

total amount of the turnover of Rs. 2,631 crore of the company, as on 31.03.2014,

Rs. 2,518 crore is on account of procurement activities alone, which accounts for

96 percent of the turnover of the Corporation. Thus, indicating that HWC is only

generating a 4 percent turnover from its core mandate. This again is a matter of

concern.

Table 5

Financial position of the Agricultural Sectors PSUs

(Rs. in crore)

PSUs Year Accumulated Profit /Loss

Turnover % turnover from

procurement

Haryana Agro Industries Corporation

2004-05 21.08 617.12 -

2013-14 0.68 2,654.88 94.56

Haryana Seed Development Corporation

2004-05 3.56 33.99 -

2013-14 10.9 119.63 -

Haryana Land Reclamation & Development Corporation

2004-05 7.99 84.38 -

2013-14 7.05 80.68 -

Haryana Ware Housing Corporation

2004-05 239.25 794.61

2013-14 259.85 2,630.76 95.71

Total 2004-05 271.88 1530.10 -

2013-14 278.48 5485.95 -

Source: Haryana Bureau of Public Enterprises

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As Table 5 indicates, the cumulative profit of the aforesaid Agriculture Sector PSUs

was Rs. 271.88 crore during the year 2004-05 stood at almost same level after a ten-

year period in 2013-14.

Public Sector Enterprises in the Cooperative Sector

1.16 The following entities in the cooperative sector have been studied:

• The Haryana State Federation of Cooperative Sugar Mills Limited and

its 10 Sugar Mills.

• The Haryana State Cooperative Apex Bank Limited.

• Haryana State Cooperative Agriculture and Rural Development Bank

Limited. (HSCARDB)

• The Haryana State Cooperative Supply and Marketing Federation

Limited (HAFED).

• Haryana State Federation of Consumers Cooperative Wholesale

Stores Ltd. (CONFED).

• The Haryana Dairy Development Cooperative Federation Limited.

• The Haryana State Cooperative Housing Federation Limited.

• The Haryana State Cooperative Labour & Construction Federation

Limited.

1.17 The Haryana State Federation of Cooperative Sugar Mills Limited and its

10 Sugar Mills: The affairs of the sugar mills are managed by the Apex body called

the 'Haryana State Federation of Cooperative Sugar Mills'or Sugarfed. The objective

of the Sugarfed is to establish new Cooperative Sugar Mills, arrange funds from the

State Government and Government of India and other financial institutions;

rendering advice to the Cooperative Sugar Mills for improving their performance; and

preparation of cane development plan for improving productivity and income of the

farmers from sugar cane. The federation is working on a ‘no profit no loss’ basis. The

federation, being the Apex Body, manages the affairs of 10 Cooperative Sugar Mills,

namely:

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• Panipat Cooperative Sugar Mills Ltd.

• Karnal Cooperative Sugar Mills Ltd.

• Kaithal Cooperative Sugar Mills Ltd.

• Sonipat Cooperative Sugar Mills Ltd.

• Shahabad Cooperative Sugar Mills Ltd.

• Meham Cooperative Sugar Mills Ltd.

• Jind Cooperative Sugar Mills Ltd.

• Palwal Cooperative Sugar Mills Ltd.

• The Haryana State Cooperative Sugar Mills Ltd. Rohtak

• Gohana Cooperative Sugar Mills Ltd.

1.18 These sugar mills have been established between the 1956 and 2001. All

Sugar Mills except Shahbad are in losses. The cumulative loss of all the Sugar Mills

was Rs. 379 crore in 2004-05 which has increased to Rs. 1,096 crore in 2013-14.

Besides this, an amount of Rs. 190 crore was adjusted by way of waiver of loans

and interest granted, by the State Government to the Sugar Mills in the year

2006-07. Similarly waiver of interest amounting to Rs. 7 crore was granted in the

year 2009-10. The losses of the Sugar Mills have increased despite these waivers.

The turnover of all the Sugar Mills together was of the order of Rs. 633 crore in

2004-05, which has been varying widely over the years and stood at Rs. 907 crore in

2013-14. The outstanding loans obtained from the State Government for cane

payment as on 31.03.2005 were Rs. 285 crore, this was converted into equity in the

year 2006-07. From 2007-08 to till 31.3.2014 additional loans of the order of

Rs. 788 crore have been given by the State Government to the Sugar Mills. In

addition, another loan of Rs. 40 crore was taken for setting up the Cooperative

Sugar Mill at Rohtak. Besides this, loans have also been obtained by the Sugar Mills

from other State Government institutions like Haryana Agriculture Marketing Board,

HARCO Bank, etc. The above facts clearly indicate that the Cooperative Sugar Mills

are loss making and are surviving only because of the State Government payments

in the form of soft loans.

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1.19 Haryana State Cooperative Apex Bank Ltd. (HARCO Bank): The Haryana

State Cooperative Apex Bank Ltd. (HARCO Bank) at apex level and 19 Central

Cooperative Banks (CCBs) at districts level are working as credit institutions in

Cooperative Sector. The Reserve Bank of India licenses these banks. The

Cooperative Banking system caters to the credit needs of the farmers, residents of

rural areas, cooperative institutions etc. Their sources of funds are their own

resources mobilized through deposits, borrowings from RBI, NABARD and the

Government, etc. In Haryana there is a network of 657 Primary Agriculture

Cooperative Societies (PACs). Since 2004-05 the HARCO Bank posted a net profit

ranging from Rs. 5 crore to Rs. 37 crore in different years except 2009-10 when a

loss of Rs. 18 crore was incurred. Profits earned during the year are allocated to

various heads in accordance with their byelaws; hence there are no cumulative

profits. All Central Cooperative Banks (CCBs) posted profits of Rs. 51 crore during

the year 2004-05. Their profitability declined to Rs. 19 crore in the year 2013-14. In

the year 2004-05 the accumulated profit of the all CCBs was Rs. 100 crore which

declined drastically and they had losses of Rs. 66 crore as on 31.3.2014. There has

been sharp decline in the market share of cooperative banks in loans and advances

to priority sector from 36 percent in 2004-05 to 14 percent in 2013-14. The recovery

percentage of the HARCO Bank has been reported to be above 99 percent except in

the year 2008-09 when it declined to 97.74 percent. Non-Performing Assets (NPAs)

of the HARCO Bank have been ranging from 0.02 percent to 0.07 percent whereas

the NPAs of CCBs have increased drastically which 5.16 percent in the year

2004-05 to 6.19 percent in 2013-14. The recovery percentage of the CCBs on an

average was 80.38 percent in the year 2004-05 which has declined to 70.72 percent

in 2013-14. The past decade has thus seen a decline in the recovery of loans by

CCBs. This is a matter of concern.

1.20 Haryana State Cooperative Agriculture Rural Development Bank Ltd.

(HSCARDB) was established to meet the medium and long-term credit needs of the

farmers of Haryana. Besides, there are 19 District Primary Cooperative Agricultural

Rural Development Banks (DPCARDBs). These have played an important role in

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capital formation and asset creation in Haryana’s rural economy. Prior to 2004-05,

the bank had been meeting the credit requirement of farmers as per its mandate,

and advancing loans every year at an average rate of Rs. 300 crore per year.

However, thereafter, both the lending as well as the recovery has been declining

year after year. The bank has been experiencing difficulty in meeting the repayment

liabilities to NABARD and other lenders. HSCARDB is depending largely on the

refinance facility against Government guarantee by availing loans from the

NABARD, the State and the Central Governments in the ratio of 90:5:5 respectively.

The Government of Haryana has given a bulk guarantee of Rs. 3,500 crore to

NABARD against its borrowing upto March, 2017. The cumulative losses of the bank

increased from Rs. 3 crore in 2004-05 to Rs. 60 crore in the year 2013-14. Thus, the

losses have increased by Rs. 57 crore from the base year. Similarly the cumulative

losses of the DPCARDBs increased from Rs. 223 crore in 2004-05 to Rs. 915 crore

in the year 2013-14. The losses have mounted by Rs. 693 crore from the base year.

The recovery at the HSCARDB level fell from 69.62 percent in 2004-05 to 32.09

percent in the year 2013-14, and the recovery at DPCARDB level fell from 40.50

percent in 2004-05 to 27.42 percent in the year 2013-14. This indicates poor

cooperative financial sector management and a lack of suitable policy initiatives to

arrest the clear trends of decline.

1.21 The Haryana Cooperative Supply and Marketing Federation Ltd.

(HAFED) came into existence in 1966, with the mandate to make arrangements for

procurement, marketing and processing of agriculture produce and allied products. It

is also engaged in making arrangements for supply of agriculture inputs to the

farmers, and facilitates the working of affiliated marketing cooperative societies.

HAFED is the largest cooperative federation in the State. HAFED has been in profit

since 2004-05. Its annual profitability increased from Rs 17 crore in 2004-05 to

Rs. 49 crore in 2013-14. Its cumulative profit increased from Rs. 322 crore in

2004-05 to Rs. 590 crore in 2013-14.The debt of the HAFED was Rs. 502 crore as

on 31.3.2005, which became Rs. 2,689 crore as on 31.3.2014. Most of the debt is on

account of working capital loans obtained for procurement under the MSP regime.

16

Of its turnover of Rs. 9,193 crore in 2013-14, 92.36 percent is on account of State

procurement activities.

1.22 The Haryana State Federation of Consumers’ Cooperative Wholesale

Stores Ltd. (CONFED) popularly known as CONFED came into existence in 1966

under the Punjab Cooperative Societies Act, 1961. The main object of the CONFED

was to co-ordinate and facilitates the working of the affiliated Central Cooperative

Consumer Stores and to assist in their organization and development. The turnover

of the Federation was Rs. 762 crore in 2004-05, which increased to Rs. 1,565 crore

in 2013-14. The net profit of the federation was Rs. 5 crore in 2004-05 which has

gradually turned into a net loss of Rs. 59 crore in 2013-14. The accumulated losses

of the Federation increased from Rs. 1 crore in 2004-05 to Rs. 117 crore in the year

2013-14. The present debt in the form of a cash credit limit of Rs. 306 crore has

been obtained against a State Government guarantee. CONFED is making heavy

losses year after year. In order to reduce its losses, it has deviated from its original

mandate and ventured into the procurement business. But that too has proved to be

a liability due to damage of stocks.

1.23 Haryana Dairy Development Cooperative Federation Ltd. was established

in the year 1970, Haryana Dairy Development Cooperative Federation Ltd. is the

apex body of 3,252 village level Dairy Cooperative Societies functioning under it.

These societies collect milk from milk producers and sell it to district level milk

unions. There are six milk unions and each has a milk plant of its own at Jind,

Ambala, Rohtak, Ballabhgarh, Sirsa and Kurukshetra. The turnover of the Federation

was Rs. 369 crore in 2004-05, which increased to Rs. 931 crore in 2013-14.The

profit of the Federation stood at Rs. 84 lakh in the year 2004-05 which has reached

Rs. 4 crore in the year 2013-14. The Federation had cumulative loss of Rs. 31 crore

in the year 2004-05, which as a result of earning profit over the last 10 years has

come down to a loss of Rs. 34 lakh in 2013-14.There is no debt as reported by the

Federation. However, a liquidity problem is faced in the flush season due to higher

procurement of milk for which short-term loans are availed from Banks from time to

17

time and these are being repaid. The Federation through its milk unions collects only

a negligible amount of the total licensed capacity of all the milk plants operating in

the State.

1.24 The Haryana State Cooperative Housing Federation Ltd. was established

in the year 1973. The main objective of this Federation is to grant loans or advances

for construction of houses and to facilitate working of Primary Cooperative House

Building Societies. The advances provided by the Federation during the last ten

years are only Rs. 20 crore. The Federation provided loans amounting to Rs. 5 crore

during the year 2004-05 which became as low as Rs. 21 lakh during the year

2009-10. The loans disbursed to the Societies over the last ten years have varied.

Rs. 3 crore was loaned during the year 2013-14. The Federation was in profit in six

years and in loss for four years in the reference period. Its profit was Rs. 2 crore in

the year 2004-05 which changed into a loss of Rs. 98 lakh in the year 2013-14. The

cumulative profit stood at Rs. 2 crore in the year 2004-05 which changed into

cumulative loss of Rs. 3 crore during the year 2013-14. The liability of the Federation

stood at Rs. 67 crore in 2004-05 which was Rs. 59 crore as on 31.03.2014. The

Federation on an average advanced Rs. 2 crore annually and over the last five years

has provided advance to only 500 beneficiaries. It can reasonably be said that the

Federation has not being able to achieve its mandate. The major liability of Housefed

is towards the Life Insurance Corporation of India (LIC), which has been providing

loans to the Federation. An amount of Rs. 31 crore was overdue for repayment to

LIC as on 31.3.2014.

1.25 Haryana State Cooperative Labour & Construction Federation Ltd. was

set up in the year 1966, its main objective was to encourage providing maximum

work to the members of primary cooperative Labour & Construction Societies

belonging to the poorer section in rural as well as urban sector through labour

cooperatives in Haryana. 3,956 Societies were formed by the Federation till 2004-05,

which increased to 7,843 in the year 2013-14. The construction work executed by

these Societies during the year 2004-05 was Rs. 101 crore as against Rs. 192 crore

18

executed in the year 2013-14. The turnover of the federation was Rs. 1.55 crore in

the year 2004-05, which increased to Rs. 4.15 crore in the year 2013-14. The

Federation is in profit since inception. It had earned a profit of Rs. 48 lakh in the year

2004-05, which increased to as high as Rs. 5 crore in the year 2009-10. It has gone

into a decline since then with its profit in 2013-14 standing at Rs. 91 lakh.

Table 6 Financial position of the Cooperative Sectors PSUs

(Rs. in crore)

PSUs

Year Accumul-ated Profit /Loss

Accumu-lated Debt

Turnover Equity Contributed by the State Govt.

The Haryana State Federation of Cooperative Sugar Mills Limited and its 10 Sugar Mills

2004-05 -378.88 284.63 633.37 33.63

2013-14 -1,095.85 788.50 907.44 317.83

The Haryana State Cooperative Apex Bank Limited (HARCO Bank)

2004-05 35.01 1,378.87 0.00 3.72 2013-14 21.98 3,941.97 0.00 5.62

The Haryana State Cooperation Agriculture & Rural Dev. Bank (HSCARDB)

2004-05 2.92 2,119.06 0.00 4.14

2013-14 59.05 1,938.53 0.00 13.40

The Haryana State Cooperative Supply and Marketing Federation Ltd. (HAFED)

2004-05 322.27 502.05 2,642.21 0.19

2013-14 590.03 2,689.58 9,193.16 0.19

Haryana State Federation of Consumers Cooperative Wholesale Stores Ltd. (CONFED)

2004-05 -0.83 37.88 762.26 5.41

2013-14 -116.68 498.88 1,565.52 4.08 The Haryana Dairy Development Cooperative Federation Limited

2004-05 -31.17 45.15 368.70 13.07

2013-14 0.34 0.00 931.36 28.32 Haryana State Cooperative Housing Federation Ltd.

2004-05 1.67 67.16 54.33 4.31 2013-14 -3.55 59.41 33.15 12.15

Haryana State Cooperative Labour & Construction Federation Ltd.

2004-05 0.79 0.00 1.55 0.50 2013-14 3.32 0.00 4.15 2.58

TOTAL 2004-05 -48.22 4434.8 4462.42 64.97 2013-14 -541.36 9916.87 12634.78 384.17

Source: Haryana Bureau of Public Enterprises

As Table 6 indicates, the cumulative losses of the Cooperative Sector’s PSUs have

increased from Rs. 48 crore to Rs. 541 crore during the reference period. Also the

cumulative debt, which was Rs. 4462 crore in the year 2004-05, has increased to Rs. 9917 crore in the year 2013-14.

19

Public Sector Enterprises in the Social Sector

1.26 Three organizations namely the Haryana Scheduled Caste Finance &

Development Corporation, the Haryana Backward Classes and Economically

Weaker Sections Kalyan Nigam and the Haryana Women Development Corporation

were studied. It was found that these entities are in declining financial health with

accumulated losses and are not being able to fully meet their mandate as their cost

of lending to their target groups had become more costly and non competitive over

the reference period.

20

CHAPTER 2

Off-Budget Resources of the State

2.1 The State Government has created several statutory off budget institutions like

the Haryana Urban Development Authority (HUDA), the Haryana Rural Development

Fund Administration Board (HRDF), the Haryana State Agriculture Marketing Board

(HSAMB), the Infrastructural Development Fund (Town & Country Planning

Department), the Haryana Building & Other Construction Workers Welfare Board,

etc. for specific focused areas of project implementation. This chapter examines the

financial health of these Authorities and Boards for the period 2004-05 to 2013-14.

The overall financial trends of the 78 urban local bodies in Haryana are also studied

in the later part of the chapter.

2.2 Haryana Urban Development Authority (HUDA) was established in 1977

under the provisions of the Haryana Urban Development Authority Act 1977 as a

body corporate. The core objective of HUDA is to promote and secure the

development of urban areas in a systematic and planned manner. As per the Act, the

HUDA receives receipts for the plot floated by disposal of land building and other

properties. HUDA has a corpus of funds collected receipts from colonisers for change

in land use (CLU) permissions, etc. through the Directorate of Town and Country

Planning under the Haryana Development & Regulations of Urban Areas Act, 1975.

HUDA is spending this money on the External Development works as defined in the

Haryana Development & Regulations of Urban Areas Act, 1975. The total resource

generation (including EDC) during period 2004-05 to 2013-14 was Rs. 32,039 crore

against which the expenditure on land acquisition and development works is

Rs. 29,051 crore. During this period, HUDA has also paid income tax to the tune of

Rs. 3,488 crore on its turnover rather on its profit, due to a non-compliance of

accounting standards. It is pertinent to point out that as on 31.12.2014 an amount of

21

Rs. 11,048 crore of EDC is overdue and outstanding against licences granted by the

Department of Town & Country Planning in various Urban Estates in Haryana, which

has not been collected from the licensees. Of this amount Rs. 2909 crore is under

stay order from the Courts.

Table 7

Expenditure incurred by HUDA (2004-2005 to 2013-14)

(Rs. in crore)

Sr. No. Particulars Expenditure

1 Land Acquisition cost 9,852.00

2 Enhancement cost on land 9,997.65

3 Development Works 9,201.77

4 Income Tax 3,488.61

Total 32,540.03

Source: Haryana Urban Development Authority

2.3 If we study the district wise resources collected by HUDA during the period

under reference and the corresponding funds allocated to these districts for works, it

is observed that some districts like Rohtak, Panchkula, Rewari and Ambala received

far more funds than were collected from these districts. This is evident from column

7 of the Table 8 which indicates that Rs. 5,525 crore more than their share was spent

in these districts, while district Gurgaon received Rs. 7,527 crore less against the

resources generated from there. This indicates a skewed focus on some districts at

the cost of equitable development during the period under reference.

22

Table 8 District wise Resource Generation and Expenditure by HUDA

from 2004-05 to 2013-14 (Rs. in crore)

District Resource Generation of

HUDA

EDC Total Receipts

(2+3)

Total Expenditure

Excess (Receipt)

Deficit (Exp.)

1 2 3 4 5 6 7 Ambala 322 33 355 915 560 Bhiwani 135 0 135 482 347 Faridabad 2,445 1,791 4,236 3,953 283 Fatehabad 0 49 49 240 191 Gurgaon 5,024 10,609 15,633 8,106 7527 Hissar 1,374 46 1,420 1,735 315 Jhajjar / Bahadurgarh

667 165 832 903 71

Jind 268 1 269 464 195 Kaithal 361 39 400 329 71 Karnal 527 272 799 722 77 Kurukshetra 290 124 414 189 225 Mahendragarh 0 4 4 86 82 Mewat 0 0 0 0 0 0 Palwal 0 111 111 299 188 Panchkula 1,761 380 2,141 2,959 818 Panipat 797 201 998 668 330 Rewari 430 235 665 1,347 682 Rohtak 385 424 809 2,412 1,603 Sirsa 434 14 448 673 225 Sonipat 536 1,532 2,068 2,230 162 Yamunanagar/ Jagadhari

192 61 253 339 86

8,513 5,525 G. Total 15,948 16,091 32,039 29,051 2,988

Source: Haryana Urban Development Authority

During the period under reference, 4,646.58 acres of land were released from the process of acquisition and 2,602.58 acres of this land was released in the 3 districts of Gurgaon, Sonipat and Rohtak. 2.4 Haryana Rural Development Fund Administration (HRDF) Board was established in 1987 under the provisions of Haryana Rural Development Act, 1986. The Rules under the Act provide for the levying of an ad-valorem fee, at the rate of two per centum of the sale proceeds of the agricultural produce bought or sold or brought for processing in the notified market areas. During the period from 2004-05 to 2013-14, the total income of the Board from all sources (fee collection, interest,

23

refund etc.) was Rs. 3,450 crore, against which 61,849 works at an estimated cost of Rs. 3,505 crore have been sanctioned and Rs. 3,241 crore released for execution. Studying the receipts and expenditure for HRDF, Table 9 provides the district wise resources collected and allocated by the Board. It is observed that certain districts have been allocated a disproportionately large amount of funds for development of rural infrastructure when compared with the receipts collected from these districts. This indicates inequitable allocation of funds for development giving rise to regional disparities in creation of rural infrastructure.

Table 9 District wise Resources and Status of Funds Released by HRDF

(2004-05 to 2013-14) (Rs. in crore)

District

Resource Generation Expenditure incurred

HRD Fees

(A)

Refund, Interest, Income from HPB

(B)

Total

(A+B)

Amt. Sanctioned Amt. Released

1. Ambala 131 19 150 102 99 2. Bhiwani 39 6 45 234 221 3. Faridabad 47 7 54 80 74 4. Fatehabad 298 43 341 112 109 5. Gurgaon 42 6 48 66 60 6. Hissar 164 23 187 253 232 7. Jhajjar 19 3 22 462 421 8. Jind 292 42 334 246 221 9. Kaithal 321 46 367 184 179 10. Karnal 360 51 411 136 129 11. Kurukshetra 310 44 354 82 80 12. Mewat 17 2 19 63 59 13. Mohindergarh 7 1 8 128 118 14. Palwal 96 14 110 69 67 15. Panchkula 17 2 19 21 21 16. Panipat 158 23 181 144 128 17. Rewari 18 2 20 169 159 18. Rohtak 52 7 59 359 311 19. Sirsa 363 52 415 146 139 20. Sonepat 171 24 195 369 339 21. Yammunanagar 97 14 111 80 75

Total 3,019 431 3,450 3,505 3,241

Source: Development & Panchayats Department, Haryana

24

2.5 Haryana State Agricultural Marketing Board (HSAMB) was established on

1st August, 1969 with the vision to provide opportunities for increasing the net income

in the agriculture sector and for transforming farmers into a prosperous, progressive

and proud ones by setting up efficient and knowledge based marketing systems and

services. The main source of income of HSAMB is the receipts under Section 27 of

Punjab Agricultural Produce & Marketing Act, 1961. The Board receives 30 percent

of the market fees collected by the market committees (MCs). The Market

Committees also place a bulk of these funds at the disposal the HSAMB for various

works. The rates of fee on major agricultural produce are as under:

Agricultural Produce Rate of Fee levied

2003-04 2013-14

Cotton 2% • 1.5% w.e.f 18.11.2010

• 0.8% w.e.f 01.11.2011

Rice/Paddy 2% 2%

Wheat 2% 2%

Fruits & Vegetables 2%

• 1% w.e.f. 22.12.2011 on potato

• 1% w.e.f. 1.9.2012 on all vegetable & fruits

• No fee is liveable on fruits & vegetables w.e.f. 1.3.2014

Fodder 2% 2%

The Fund is utilised mainly for the construction and repair of rural link roads,

marketing of agricultural produce on co-operative lines and general improvements in

the notified market areas. The resource generation of the Board during 2004-05 was

Rs. 129 crore which has increased to Rs. 574 crore in 2013-14. Against these

resources the expenditure of the Board was Rs. 150 crore in 2004-05 and

Rs. 549 crore in 2013-14. During the period from 2004-05 to 2013-14, the total

income of the Board from all sources (30 percent of market fees, deposit works of

MCs, other incomes i.e. interest, rent, etc.) was Rs. 3,530 crore. These receipts have

been allocated to various districts for works as detailed at Table 10 which is also

clearly skewed allocation of resources to districts.

25

Table 10

District wise Resource Generation and Expenditure by HSAMB (2004-05 to 2013-14)

(Rs. in crore) District Resource Generation Exp.

Incurred Exp.

in excess of

resource

30% of Mkt. Fee

Deposit works of

MCs

Other i.e. Rent, interest, HRDF, cont.

etc.

Total

1 2 3 4 5 6 7 Ambala 40 94 1 135 110 Bhiwani 25 72 1 98 158 60 Faridabad 44 113 0 157 112 Fatehabad 92 134 0 226 176 Gurgaon 24 34 1 59 189 130 Hisar 72 165 1 238 212 Jind 89 220 0 309 189 Kaithal 103 194 0 297 186 Karnal 95 275 1 371 253 Jhajjar 6 28 0 34 348 314 Kurukshetra 96 208 0 304 167 Mohindergarh 7 3 0 10 0 Panipat 68 131 0 199 130 Panchkula 7 54 1 62 56 Rewari 10 10 1 21 103 82 Rohtak 24 24 1 49 215 166 Sirsa 114 302 1 417 205 Sonepat 47 100 0 147 149 2 Yamunanagar 35 105 1 141 101 Electrical 256 256 0 998 2,266 266 3,530 3,059

Source: Haryana State Agricultural Marketing Board

The above Table reveals that the allocation of funds in some districts is far more than

the resources generated by these, and this has been at the cost of other districts

which contributed to this Fund.

2.6 Infrastructure Development Fund (IDF): The Government of Haryana in

2006 included infrastructure development charges in the Haryana Development and

Regulation of Urban Areas Act, 1976. The amount of Infrastructure Development

26

Charges deposited by the colonizer constituted the IDF for the development of major

infrastructure projects in the State of Haryana. The note to the Act states that this

Fund shall be utilized for stimulating socio-economic growth and development of

Major Infrastructure Projects for the benefit of the State of Haryana. The resource

generation by this entity during 2006-07 was Rs 121 crore which has increased to

Rs. 604 crore in 2013-14. Against the total accumulated receipts of Rs. 2,989 crore,

the expenditure incurred till 2013-14 is Rs. 1,321 crore. Thus, the Fund has not been

utilized fully even though there was a need for relevant infrastructure development.

Table 11

Recourse Generation and Expenditure under Infrastructure Development Fund (IDF) for the period 2006-07 to 2013-14

(Rs. in crore) Sr. No.

Year Receipt Exp. Infrastructure Augmentation Charges (IAC)

Infrastructure Development Charges (IDC)

Total

1 2006-07 - 121 121 - 2 2007-08 - 179 179 - 3 2008-09 - 358 358 74 4 2009-10 - 318 318 401 5 2010-11 - 578 578 3 6 2011-12 - 348 348 293 7 2012-13 0 483 483 289 8 2013-14 84 520 604 261 Total 84* 2,905* 2,989* 1,321

Source: Department of Town & Country Planning, Haryana

* Above figures do not include the interest amount and are subject to reconciliation and finalization of Accounts.

2.7 Haryana Building & other Construction Workers Welfare Board: The

Central Government enacted the “Building and Other Construction Workers

(Regulation of Employment and Conditions of Service) Act” in the year 1996. The

main objective of this Act is to regulate the employment and conditions of service and

to provide for safety, health and welfare measures for building and other construction

workers. Similarly, the Building and Other Construction Workers Welfare Cess Act

was also enacted in 1996 to provide for levy and collection of cess on the cost of

27

construction incurred by employer with the view to augmenting the resources of the

Building and Other Construction Workers Welfare Boards. The Haryana Building and

Other Construction Workers Welfare Board under the provision of the Act was

constituted in 2006 to receive the levy of the above cess and to channelize benefits

to the construction workers. The levy of 1 percent cess on the cost of construction

incurred by the employers including public sector undertakings is being collected

through the Departments like Town & Country Planning, HUDA, and Municipal

Corporations/Committees at the time of granting licenses/ approval of building plans

and the cess such collected is transferred to the Welfare Board. While the total

receipts of the Board are Rs.1123 crore since its inception, an amount of Rs. 49

crore only has been spent on various welfare schemes upto 31.03.2014.

Table 12

Haryana Building and other Construction Workers Welfare Board

(Rs. in crore)

Year Cess Collected/

Available Fund

Expenditure Total Exp. Establishment For Schemes

of the Board Advances to other Deptts.

2006-07 0.00 0.00 0.00 0.00 0.00

2007-08 24.53 0.03 0.05 0.00 0.08

2008-09 69.98 0.15 0.67 0.00 0.82

2009-10 102.20 0.28 2.20 0.00 2.48

2010-11 199.40 0.40 3.28 0.19 3.87

2011-12 220.99 0.45 7.72 0.41 8.58

2012-13 278.94 0.52 7.54 0.09 8.15

2013-14 227.27 0.59 12.37 12.57 25.53

Total 1123.31 2.42 33.83 13.26 49.51

Source: Labour Department, Haryana

As is evident from the Table above, almost the entire Fund remains unutilized, thus

indicating that this was obviously not a priority for the Government in the past

decade.

28

Urban Local Bodies

2.8 Urban Local Bodies are important institutions of self governance providing

municipal services and civic amenities. Presently, there are 78 Urban Local Bodies

(ULBs) in Haryana consisting of 9 municipal corporations, 19 municipal councils and

50 municipal committees. As per present classification, the municipalities are of three

kinds. Municipal Committee for an urban population not exceeding 50,000; Municipal

Council for a population exceeding 50,000 but not exceeding 5,00,000; and Municipal

Corporation with population exceeding 5,00,000. The factors taken into account for

determining municipal areas are the total population of the area, density of

population, revenue generation potential for the local administration, percentage of

employment in non-agriculture activities, economic importance, or such other factors

as the State may deem fit.

2.9 A brief overview of the urbanization process in Haryana is provided so as to

place in focus the strategic importance of this part of the Government. Haryana has

been urbanizing rapidly since 1966. While a decadal growth of 9.8 percent between

2001 and 2011 has been recorded for the growth of population in the rural areas, the

urban areas have recorded a growth rate of 44.6 percent in this time frame. The

urban population registered an absolute increase of 27,26,799 increasing from

61,15,304 in 2001 to 88,42,103 in 2011. In this way, the share of Haryana’s urban

population has increased from 29.00 percent in 2001 to 34.88 percent in 2011.

Further, nearly one half of the State falls within the National Capital Region (NCR)

around Delhi and this area is experiencing an even higher rate of urbanization.

Eleven districts of Haryana fall in the NCR and two districts namely Jind and Karnal

are yet to be notified. This rapid urbanization necessarily implies that the ULBs in

Haryana must be geared up to provide basic civic infrastructure to this rapidly

growing population in terms of sewerage, drinking water, drainage, roads, street

lights, solid waste disposal facilities, hospitals, fire stations, etc.

2.10 In conformity with the 74th Constitutional Amendment, the State Government

enacted the Haryana Municipal (Amendment) Act, 1994, which provides for specific

29

areas of responsibility of the municipalities and their power to raise revenues,

through obligatory as well as discretionary taxation measures. Provision has also

been made for transfer of 18 functions as mentioned in the 12th Schedule of the

Constitution. The ULBs generate their own income through the following taxes and

fees:

i. Property Tax

ii. Stamp Duty on property transactions in municipal areas

iii. Taxes on vehicles

iv. Electricity Tax

v. Development fee

vi. Excise Duty share

vii. Trade Tax

viii. Advertisement Tax

ix. Rent from municipal properties

x. Sale of land

xi. Others

Although these fees and taxes are collected by ULBs or by the State on behalf of

ULBs, but the Urban Local Bodies do not have the freedom to decide on the rates for

these levies. Besides, the following taxes are collected by State and later on

transferred to ULBs:

i. Stamp duty on property transactions in municipal areas

ii. Taxes on vehicles

iii. Electricity Tax

iv. Excise Duty share

v. Surcharge on VAT

30

Table 13

Details of revenue Receipts and Expenditure of Urban Local Bodies

(Rs. in crore)

Year Own Tax & Non Tax Revenue

Revenue Expenditure

Surplus/ Gap (2-3)

1 2 3 4

2004-05 126.70 173.11 -46.41

2005-06 144.20 175.78 -31.58

2006-07 193.93 225.73 -31.80

2007-08 147.79 222.02 -74.23

2008-09 164.36 276.03 -111.67

2009-10 347.17 290.92 56.25

2010-11 345.38 680.85 -335.47

2011-12 609.27 970.51 -361.24

2012-13 703.52 1020.83 -317.31

2013-14 907.39 1445.14 -537.75

Total 3689.71 5480.92 -1791.21

Source: Urban Local Bodies Department, Haryana Note: Data for 2013-14 is pre-actual.

As is evident from the above Table, the revenue deficit of all Urban Local Bodies

put together has grown about 38 times between 2004-05 and 2013-14, from

Rs 46 crore to Rs. 1791 crore. As the resources of Urban Local Bodies fall far short

of their operational liabilities, there is a palpable lack of quality in civic management.

There is also an obvious lack of targeted expenditure to create civic infrastructure

expected of these growth driving urban centres. As a result of the lack of resources,

and the added problem of an unclear policy mandate, urban Haryana is beset with

the problem of mushrooming and haphazard growth and poor infrastructure.

31

Annexure I

List of Public Enterprises of Haryana Government

Sr.No. Name of the Administrative Department and Public Enterprise.

Agriculture Department

1. Haryana Agro Industries Corporation Limited

2. Haryana Seeds Development Corporation Limited

3. Haryana Land Reclamation & Development Corporation Limited

4. Haryana State Warehousing Corporation

5 Haryana State Agricultural Marketing Board

Cooperation Department

6 Haryana State Cooperative Supply & Marketing Federation Limited (HAFED)

7 The Panipat Cooperative Sugar Mills Ltd., Panipat

8 The Karnal Cooperative Sugar Mills Ltd., Karnal

9 The Kaithal Cooperative Sugar Mills Ltd., Kaithal

10 The Sonipat Cooperative Sugar Mills Ltd., Sonipat

11 The Shahabad Cooperative Sugar Mills Ltd., Shahabad

12 The Meham Cooperative Sugar Mills Ltd., Meham.

13 The Jind Cooperative Sugar Mills Ltd., Jind.

14 The Palwal Cooperative Sugar Mills Ltd., Palwal.

15 The Haryana Cooperative Sugar Mills Ltd., Rohtak

16. Ch. Devi Lal Cooperative Sugar Mills Ltd., Gohana

17. Haryana State Federation of Cooperative Sugar Mills Limited

18. Haryana State Cooperative Apex Bank Limited

19. Haryana State Cooperative Agriculture & Rural Development Bank Limited

20. Haryana State Cooperative Development Federation Limited (HARCOFED)

21. Haryana Dairy Development Cooperative Federation Limited

22. Haryana State Cooperative Labour& Construction Federation Limited

23. Haryana State Cooperative Housing Federation Limited

Forest Department

24 Haryana Forest Development Corporation Limited

Food and Supplies Department

25. Haryana State Federation of Consumers Cooperative Wholesale Stores Limited (CONFED)

32

Housing Department

26 Housing Board Haryana

Home Department

27. Haryana Police Housing Corporation Limited

Industries Department

28. Haryana Financial Corporation Limited

29. Haryana State Industrial and Infrastructure Development Corporation Limited

30. Haryana Khadi & Village Industry Board (HKVIB)

IT Department

31. Haryana State Electronics Development Corporation Limited

PWD (B&R)

32. Haryana State Roads & Bridges Development Corporation Limited

Power Department

33 Haryana Power Generation Corporation Limited

34 Haryana Vidyut Prasaran Nigam Limited

35 Uttar Haryana Bijli Vitran Nigam Limited

36 Dakshin Haryana Bijli Vitran Nigam Limited

Welfare of Schedule Castes & Backward Classes Department

37 Haryana Scheduled Castes Finance & Development Corporation Limited

38 Haryana Backward Classes & Economically Weaker Sections Kalyan Nigam Limited

Tourism Department

39 Haryana Tourism Corporation Limited

Transport Department

40 Haryana Roadways Engineering Corporation Limited

Town & Country Planning Department

41 Haryana Urban Development Authority (HUDA)

Development and Panchayat Department

42 Haryana Rural Fund Administration Board

Women and Child Development Department

43 Haryana Women Development Corporation Limited

33

Annexure II

Details of Equity Infusion by State Government in Power Companies

(Rs. in crore)

Year HVPNL HPGCL UHBVNL DHBVNL Total

2004-05 25.93 155.13 24.13 22.17 227.36

2005-06 57.05 178.69 20.42 19.29 275.45

2006-07 171.46 460.14 67.60 86.60 785.80

2007-08 72.72 496.08 147.35 132.75 848.90

2008-09 135.27 470.80 109.63 140.00 855.70

2009-10 250.07 132.30 282.10 234.45 898.92

2010-11 374.87 183.16 56.20 39.72 653.95

2011-12 300.00 182.50 173.00 146.10 801.60

2012-13 75.12 58.08 32.87 32.55 198.62

2013-14 100.00 0.00 0.00 0.00 100.00

Total 1562.49 2316.88 913.30 853.63 5646.30

Source: Power Department, Haryana

34

Annexure III

Details of Working Capital Borrowing by DISCOMs

Uttar Haryana Bijali Vitaran Nigam Limited (UHBVNL)

(Rs. in crore )

Year Permitted by the HERC

Actual drawn by the Company

Excess over permitted

2008-09 277.00 3675.07 3398.07

2009-10 350.00 6003.24 5653.24

2010-11 1089.55 7706.64 6617.09

2011-12 972.92 7573.61 7000.69

2012-13 3097.52 11630.35 8532.83

2013-14 1064.26 14668.08 13603.82

Total 6851.25 51256.99 44805.74

Source: Power Department, Haryana

Dakshin Haryana Bijali Vitaran Nigam Limited (DHBVNL) (Rs. in crore)

Year Permitted by HERC

Actual drawn by the Company

Excess over permitted

2008-09 176.00 1506.19 1330.19

2009-10 375.00 2865.72 2490.72

2010-11 686.45 3415.95 2729.50

2011-12 666.67 3907.29 3240.62

2012-13 1367.54 6578.58 5211.04

2013-14 1112.80 8629.58 7516.78

Total 4384.46 26903.31 22518.85

Source: Power Department, Haryana

35

Annexure IV Details of Gross Outstanding Receivables (as per balance sheet)

(Rs. in crore)

Year UHBVNL DHBVNL Total

2004-05 1414.25 1437.90 2852.15

2005-06 1725.85 1772.13 3497.98

2006-07 1882.75 1388.07 3270.82

2007-08 1556.35 1563.16 3119.51

2008-09 1875.20 1846.75 3721.95

2009-10 2094.44 1902.21 3996.65

2010-11 2377.97 1914.47 4292.44

2011-12 2735.84 2178.57 4914.41

2012-13 3148.94 2740.56 5889.50

2013-14 2860.09 2044.19 4904.28

Source: Power Department, Haryana

53122—F.D.—H.G.P., Chd.